Federalism, Free Markets and the Liberty To Let One's Mind Wander.
I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives
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"Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Wednesday, March 11, 2009

Greater risk of a US default as evidenced by market prices.....

The spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. The spreads also hit a record last week.

I always wondered if the US government did default, what would one get paid with? Essentially, one must pay $10,000 to guarantee $1,000,000 in US Government debt.

Wouldn't a default make the currency worthless? Probably, so seems like a great bet. So, if I underwrote this transaction, received the insurance payment of $10,000, spent the $10,000 on wine, woman and song, then was asked to make good on this obligation in the event that that the US Government did have a 'credit event,' would I too, be eligible for a bailout from the Obamessiah? Seems like what is going on here with my theoretical example where I can assume that either I cannot pay, pay back with worhtless currency and/or get bailed out by the leviathan is the same as the people today that did stupid transactions and get bailed out by those that lived more conservatively.

So what lesson can we learn from this? Let's all get stupid since it doesn't really matter anymore. Rick Santelli is right.

But what find most appropriate is that credit risk of US Government debt is similar to that of socialist France. Blah, its just so deadening.

4 Comments:

Barakabucks.One unit of barakabuck is equal to everything. This is the beauty of communism. Everything is the same.You just need one Barakabuck and you can buy anything, since everything is actually equal.It is a very simple and feasable system.Dos vidonya comrade.